New York needs a new public pension tier

New York has the second-highest public pension burden in the country, and it's about to get even worse. The state's required payment will skyrocket from $1.5 billion to $2 billion in 2014.

The aging of the baby boomer population is one of the reasons behind this tremendous increase in pension costs; 2011 saw the first wave of these individuals reach retirement age. According to census data, the number of Americans age 65 and older is projected to grow by more than 50 percent between 2010 and 2050, while the total U.S. population is projected to grow 42 percent in that same time period.

What does this mean for New York, and its desperate need for pension reform? Our pension system is already unsustainable. The generational surge in retirees will mean that our younger population will be forced to carry the fiscal burden. At a time when we are focused on growing our economy and increasing the number of good-paying, private-sector jobs in New York, it seems counterintuitive to maintain a pension system that is hurting taxpayers and businesses and helping to drive away our best and our brightest.

The common sense proposal for a Tier VI retirement system put forth by Gov. Andrew Cuomo would provide long-overdue relief to business-owners, taxpayers, school districts and municipalities across the state, by saving a hefty $123 billion over the next 30 years.

Cuomo's plan would not affect current employees, and the new tier would still offer a defined benefits system for the future workforce — one that eliminates the use of padding tricks like overtime in pension calculations. The opportunity to enroll in a 401(k)-style retirement account would also be a new option available to new employees, providing them with "portable" benefits if they change careers.

The Business Council, along with other business, local government and education groups, has advocated for pension reform through the Let NY Work Coalition. In November, the coalition set forth a six-point agenda for real mandate relief that included making the pension system predictable and affordable.

The enactment of Tier V 2010 was a good first step toward reining in the astronomical cost of New York's pension system. The Business Council strongly supports Cuomo's proposal for Tier VI, which will help continue moving New York along the path to financial stability and renewed economic growth.